2005 BCCA 233 Joint Industry Electricity Steering Committee v. B.C. Utilities Commission

Before:	The Honourable Mr. Justice Thackray
	(In Chambers)
R.B. Wallace D.R. Bennett		Counsel for the Applicant Joint Industry Electricity Steering Committee
W.J. Andrews		Counsel for the Applicant GSX Concerned Citizens Coalition et al
C.W. Sanderson, Q.C. R.A. Skolrood		Counsel for the Respondent B.C. Hydro & Power Authority
G.K. Macintosh, Q.C. L. Keough		Counsel for the Respondent Duke Point Power Limited Partnership
Place and Date of Hearing:		Vancouver, British Columbia
April 6, 2005
Place and Date of Judgment:		Vancouver, British Columbia
April 20, 2005

Reasons for Judgment of the Honourable Mr. Justice Thackray:

[1] These applications for leave to appeal orders issued by the British Columbia Utilities Commission arise out of hearings that considered an energy supply contract designed to augment the supply of electrical power to Vancouver Island. Order E-1-05 was pronounced 17 February 2005 wherein the Commission accepted for filing an Energy Purchase Agreement (the “Agreement”) entered into between British Columbia Hydro Authority (“Hydro”) and Duke Point Power Limited Partnership (“Duke Point Partnership”).

BACKGROUND

[2] Some background is necessary in order to understand the submissions, but in that there is the pressure of time in which to prepare and deliver these reasons I will keep this to a minimum. The need for haste arises out of the expressed concern that whatever project is undertaken to secure a continued adequate supply of electricity to Vancouver Island is now behind schedule. Further, an appeal date of 2 May 2005 has been secured in this Court and, should the applicants seek a review of this order, it must be completed within the next two weeks or the appeal date will be lost.

[3] Hydro’s forecast of electricity demand on Vancouver Island predicts a capacity shortfall commencing in the winter of 2007. Hydro proposed a Vancouver Island Generation Project (the “VIGP” at Duke Point), an industrial park near Nanaimo, British Columbia. Hydro applied to a Commission for a Certificate of Public Convenience and Necessity (CPCN) for the generation project. The decision of that Commission is not under appeal but some of its findings bear upon the matters in the case at bar.

[4] The oral hearing of the VIGP application took place in Nanaimo and Vancouver from 16 June to 3 July 2003. This was followed by written arguments and an additional hearing day on 28 July 2003. Approximately 60 parties took part in the process, with about 20 playing an active role in the oral hearing. Hydro called 19 witnesses and the intervenors produced 22 witnesses. There were 250 written exhibits filed and the oral testimony required 3,000 pages of transcript.

[5] A matter of significance on this application is that Hydro proposed to the Commission in the above noted hearing that if it was to decline to grant a CPCN, a conditional certificate would be acceptable, the condition being that Hydro would conduct a Call for Tenders to determine whether the private sector could offer a more cost-effective solution to the energy supply shortage while meeting the necessary requirement for timing and reliability.

[6] The Commission denied the certificate in a decision dated 8 September 2003. The Commission concluded that Hydro had “not established that VIGP is the most cost-effective means to reliably meet Vancouver Island power needs. Therefore, the Commission Panel denies the Application for a CPCN.” (VIPG Decision, p. 77) It then added:

The Commission Panel encourages BC Hydro to proceed with a CFT... . Based on the results of the CFT, the Commission is prepared to consider any future application for CPCN approval or Electricity Purchase Agreement approval on an expedited basis.

On page 78 of the VIPG decision, the Commission made the following important statement:

The evidence in this hearing suggests that the appropriate next resource addition should be on-Island generation, provided the costs of the proponents’ projects can be confirmed near their expected values.

[7] Hydro thereby proceeded with a call for tenders for the project and advised the Commission on 3 November 2004 that Duke Point Partnership was the successful bidder. The agreement that it entered into with Hydro was for the construction at Duke Point of a natural gas thermal generating plant capable of generating 252 megawatts of capacity. The project completion date is 1 May 2007. Hydro advised the Commission that it would file the Agreement in accordance with Section 71 of the Utilities Commission Act, R.S.B.C. 1996, c. 473, which reads, in part, as follows:

71 (1) A person who ... enters into an energy supply contract must

(a) file a copy of the contract with the commission under rules and within the time it specifies, and

(b) provide to the commission any information it considers necessary to determine whether the contract is in the public interest.

(2) The commission may make an order under subsection (3) if the commission, after a hearing, finds that a contract to which subsection (1) applies is not in the public interest by reason of

(a) the quantity of the energy to be supplied under the contract,

(b) the availability of supplies of the energy referred to in paragraph (a),

(c) the price and availability of any other form of energy, including but not limited to petroleum products, coal or biomass, that could be used instead of the energy referred to in paragraph (a),

(d) in the case only of an energy supply contract that is entered into by a public utility, the price of the energy referred to in paragraph (a), or

(e) any other factor that the commission considers relevant to the public interest.

(3) If subsection (2) applies, the commission may

(a) by order, declare the contract unenforceable, either wholly or to the extent the commission considers proper, and the contract is then unenforceable to the extent specified, or

(b) make any other order it considers advisable in the circumstances.

[8] On 25 November 2004 Hydro filed with the Commission a letter from Duke Point Partnership that said to meet a production date of 1 May 2007 it would need a decision from the Commission by 7 February 2005 and notice allowing it to proceed by 1 March 2005 so that construction could commence by 1 April 2005. In a letter to Hydro of 10 November 2004, the Commission said that a procedural conference had been established to hear submissions to “determine an effective and efficient regulatory process for the review of BC Hydro’s Section 71 Application.”

[9] On 29 and 30 November 2004 a panel of the Commission, comprised of Mr. Robert Hobbs as chair, Ms. L.A. Boychuk and Mr. M. Birch as members, heard from Hydro, Duke Point Partnership and sixteen intervenors including the Joint Industry Electricity Steering Committee (“JIESC”) and the GSX [Georgia Strait Crossing] Concerned Citizens Committee (“GSXCCC”). An oral decision was delivered on 30 November 2004. It held that there would be an oral hearing under s. 71(2) of the Act and pronounced upon procedural and confidentiality issues.

[10] By way of an order dated 2 December 2004 the Commission set out the regulatory agenda for the oral hearing and set out the schedule for written information requests from intervenors. Pre-hearing conferences were held on 17 and 22 December 2004. The GSXCCC brought a motion to have Mr. Birch disqualified as a commissioner by reason of his appointment as interim president of another body. Mr. Birch voluntarily recused himself.

[11] By order G-119-04, dated 22 December 2004, the Commission ordered disclosure of information relating to the Agreement with the exception of certain pricing items and details of unsuccessful bids. On 6 January 2005 the Commission issued reasons for this order. The reasons explained that the intervenors wanted productions of documents identified as “Appendix 3” of the Agreement, also referred to as “the tariff.” The reasons quoted the submission of counsel for the JIESC in that regard, particularly his comment that if Appendix 3 was disclosed it would mean that “we will know or the customers will know what this project is going to cost them.” The reasons further quoted him as saying that his client was not seeking disclosure of the non-winning bids, those being unnecessary.

[12] The reasons further noted that Hydro wanted to keep confidential all documents that were created for the purpose of selecting the winning bid for the generating plant. The Commission said that it accepted the submission of Hydro that Hydro’s ability to get participation in future bidding processes would be compromised by disclosure of more than basic information as to the competitive process.

[13] In its reasons the Commission noted that the s. 71 hearing was “atypical” and, “as submitted by the parties”, was “unique.” It referred to the earlier hearing, but said that disclosure in this case would not follow the same analysis and logic with respect to unsuccessful bids. The Commission said that it accepted that public interest was a paramount consideration and warranted the disclosure of “Appendix 3” of the agreement. It continued as follows:

The Commission Panel also accepts, however, that the disclosure of the unsuccessful bids can reasonably be expected to cause serious deleterious effects to future bid processes with minimal public interest benefits arising from disclosure. Further, the public interest of disclosure of unsuccessful bids is not paramount in the rate payers interests in successful future bid processes.

[Order G-119-04, Reasons for decision, p. 10]

The Commission also held that the disclosure of Appendix 3 “should not be paramount to the deleterious effects of the public disclosure of the pricing terms related to dispatch of the plant. The release of such pricing terms may not only cause harm to Duke Point Partnership, but also may have deleterious effects on the future economics of the plant.” [Order G-119-04, Reasons for decision, p. 10]

[14] The JIESC had also requested a reconsideration of the scope of the hearing. This was rejected by the Commission. On 14 January 2005 the GSXCCC sought reconsideration of the scope of the hearing and the hearing schedule. This was rejected.

[15] The oral hearing commenced on 17 January 2005. The various interested parties had what is termed “witness panels” to present their cases. However, the direct evidence of the parties was submitted in writing before the oral phase of the hearing. On 19 January, at the end of the cross-examination of some Hydro witnesses, the Commission chair asked some questions and then indicated that he had an area of questioning that he believed should be pursued in camera in that it involved the bidding information from an unsuccessful bidder. Only the Commission staff and counsel, Hydro counsel and staff, the witnesses to be questioned and the commissioners were to attend.

[16] The transcript shows that the chairman was concerned that the best “portfolio” within the winning bid should proceed. It appeared to him that this was not what was occurring. He therefore said, “I want to pursue this issue, and I think in order to pursue this issue I need to do it in camera, which I think, unless there are objections to me doing that, I need advice as to how best to do that.” Counsel for Hydro then made suggestions. Counsel for the GSXCCC made observations and the chair said he would, at the end of the in camera session, “do my best to disclose as much as possible with respect to the line of questioning that I had.” No objection was taken.

[17] A redacted transcript of the in camera hearing was released on 21 January 2005. It contained some matters that caused the GSXCCC to bring a motion for the Commission to disqualify itself based upon an alleged reasonable apprehension of bias. On 24 January a further version of the transcript was released which, for the purposes of the matter before the Court on this application, was a complete version of the hearing. The transcript of the in camera hearing, at page 1741, contains a discussion as to whether duct firing was better customer value than “Pristine without duct firing.” The following was then said by the chair:

This may be an area where I can add some value to customers. And I thought your answer would be just what it is, that but for the rules of the CFT [calls for tender], you would have chosen Pristine with duct firing. It may be – I don’t know enough about this yet, but it may be that the coincidence that both portfolios are the same proponent is helpful in moving us to the outcome that’s in the customers’ best interest.

So you know now what I want to try to do. I need your help in telling me how I can get there.

A Hydro witness then testified, agreeing with the chair that steps should be investigated to be sure that the Agreement was the one that was in the “customers best interests.” The chair then said, at p. 1742, of the transcript:

But you now have DPP [Duke Point Partnership] bound by contract. You have DPP bound by contract ongoing without duct firing. If the Commission issues a decision that approves portfolio three – and this is a legal question I suppose, but is Pristine contractually bound at that stage? Are both bids live, I suppose is the question.

[18] On 26 January 2005, the GSXCCC argued its motion for disqualification. On 27 January the Commission dismissed the application with reasons to follow. The reasons, styled as L-10-05. They are eight pages in length, so I will quote only some particularly relevant passages:

... As summarized by counsel for GSXCCC, there are two basic themes that run through the reasonable apprehension of bias argument. The first is that the Commission Panel made up its mind without having heard all of the evidence. The second is that the Panel has indicated that it favours BC Hydro by providing special advantages not provided to other parties and by expressing an intention to help BC Hydro (T13:2671-2).

The matters leading to the allegation of a reasonable apprehension of bias and denial of procedural fairness and natural justice arise from the Commission Panel’s decision to enter into an in camera session on January 19, 2005 and the matters spoken to during that session. [page 1]

...

... In considering this application for disqualification, the Commission Panel is guided by the decision in Wewaykum Indian Band v. Canada, [2003] 2 S.C.R. 259, 2003 SCC 45. [page 2]

...

Near the end of cross-examination of BC Hydro Panel Two, which dealt with the CFT [tender] process, the QEM [quantitative evaluation methodology, a Microsoft Excel spread sheet developed by Hydro to evaluate responses to the calls for tender] model and outcome, the Chair questioned the witness panel members as to whether the third portfolio of Tier 1 provided better value to customers than the Tier 1 bid which had won the CFT process. Ms. Hemmingsen, a member of the witness panel, confirmed this to be so (T8:1718). [page 3]

...

Dealing first with the issue of the decision to move to an in camera session, the Chair decided to move to an in camera session to eliminate the possibility that confidential information relating to a non-successful bidder might be inadvertently disclosed. In this case, as was subsequently revealed on January 24, 2005, the non-successful bid identified by the Chair and confirmed by Ms. Hemmingsen as providing better value to the customer was an alternative proposal from DPP. However, GSXCCC and others who supported the motion submit that one of the purposes was to compare the cost-effectiveness of Tier 1 options to other possible projects that either were or could be put forward. The Commission Panel rejects these submissions. ...

Further, the Commission Panel rejects the submissions to the effect that by moving into an in camera session, other parties were disadvantaged by not being aware of the items discussed and that the Commission Panel was lending assistance to BC Hydro that was not made available to other parties. In particular, the Commission Panel notes that the Chair first asked for any objections with regard to it moving into an in camera session. None were received. [page 4]

...

In coming to the conclusion that it would not disqualify itself, the Commission Panel considered the extensive time resources and efforts to reach the stage of the proceedings at which the disqualification motion was brought. As the motion sought to disqualify both Panel members, the result would have been, if granted, that these proceedings were effectively at an end as there would be no remaining Panel member to adjudicate upon the issues. This factor was not an overriding or conclusive factor in the Commission Panel members’ deliberations in reaching the decision to dismiss the disqualification motion. Rather, it was one factor the Commission Panel considered in deciding that there were no serious grounds upon which the application rested. [page 7]

In summary, the Commission Panel has yet to reach a conclusion on the substantive aspects of the section 71 filing. It did not make any final decision before all the evidence was heard. Further, the Commission Panel rejects the assertion that it has provided assistance to BC Hydro that is not available to others in this proceeding. The Commission Panel, both in the in camera and public sessions, has tried to raise issues, both legal and factual, for all parties to consider so that they would be appropriately addressed in evidence as appropriate and argument. The only information redacted was that of a confidential nature relating to a potential negotiating position of BC Hydro and consists of some seven lines at T8:1774 (T12:2516). The parties are in the same position with respect to the disputed items as they would have been if the matters were discussed in the open hearing process. [page 8]

[19] The evidentiary portion of the hearing was completed on 28 January 2005. Written arguments were filed in early February and oral argument was held on 10 February 2005. On 17 February 2005 the Commission issued order E-1-05 that accepted the agreement for filing with some specific conditions and directions. The Joint Industry Electricity Steering Committee filed a notice of application for leave to appeal on 24 February 2005 and the GSXCCC filed its on 24 March 2005.

[20] On 9 March 2005 the Commission issued its reasons for the decision. The reasons are 103 pages in length plus appendices. It is not possible in the time limitations under which I am working to even consider summarizing these reasons. They are well indexed and if expansion of the background that I have set forth in these reasons is necessary it can be found in the first 46 pages of the Commission’s reasons.

[21] The reasons of the Commission also deal in detail with greenhouse gas risk, gas price risk, and gas transportation risk. The reasons also set forth the terms and conditions of the agreement and an analysis of the process by which the agreement came to be accepted. The “Commission Decision” is contained at pages 101-103. I will quote only one paragraph from that section:

The Commission Panel acknowledges some deficiencies within the CFT process conducted by BC Hydro but finds no compelling evidence that the outcome of the competitive bidding process is not in the public interest and should therefore be overturned, particularly in light of the imminent capacity shortfall on Vancouver Island commencing in the winter of 2007/08 with the zero rating of the HVDC [high voltage direct current] line. The Commission Panel notes that all of the non-winning bidders in the CFT will have an opportunity to participate again in future calls for system energy and capacity. In coming to its determination that electricity supply from the Duke Point Power project is in the public interest, the Commission Panel also considered several natural gas price forecasts and has concluded that it is likely that gas prices will drive market power prices in the Pacific region of North America for most if not all of the term of the contract with DPP.

[22] In concluding this background segment, I note that information was supplied to the Court bearing upon the potential effect that delay arising out of this leave application and the appeal process might cause. This goes so far as to detail what will occur should the decision of the Court on this application cause further delay. I am aware that time limitations with respect to the entire matter are significant, but I have made my decision based upon what was placed before the Court exclusive of the information as what will occur as a result of the outcome of the leave application.

STANDARD OF REVIEW

[23] With respect to the standard of review on this application, no issue was taken with the suggestions made in Queens Plate Development Ltd. v. Vancouver Assessor, Area 9 (1987), 16 B.C.L.R. (2d) 104 (C.A.). I will comment on this issue only so that the guidelines will be understood. The Utilities Commission Act provides as follows:

101 (1) An appeal lies from a decision or order of the commission to the Court of Appeal with leave of a justice of that court.

This differs from the situation in Queens Plate which was an appeal from an order pursuant to the Assessment Act, R.S.B.C. 1979, c.21 which was upheld by a judge of the Supreme Court of British Columbia. That Act provides at s. 74(7) that an appeal “on a question of law lies from a decision of the court to the Court of Appeal with leave of a justice of the Court of Appeal.”

[24] I raise that distinction in that counsel for Hydro suggested that the test in Queens Plate is “more succinctly” stated in Crestbrook Forest Industries Ltd. v. Columbia Natural Gas Ltd., [1984] B.C.W.L.D. 2926, [1984] B.C.J. No. 1873 (C.A.) (QL) at paragraph 5:

... Something more than a meritorious appeal is needed in order to justify a justice of this Court in granting leave. I think it is sufficient in this case to ask whether there is an important question of principle raised by the appeals and secondly, whether, if this Court should grant leave, that there are practical consequences of significance which would follow.

I am not going to be drawn into deciding if that passage is a “more succinct” statement of the test as set forth in Queen’s Plate. Rather, I will quote from Queens Plate wherein Mr. Justice Taggart, at page 109, said “it seems a justice may have regard for one or more of the matters listed below:”

(a) whether the proposed appeal raises a question of general importance as to the extent of jurisdiction of the tribunal appealed from;

(b) whether the appeal is limited to questions of law involving:

(i) the application of statutory provisions;

(ii) a statutory interpretation that was particularly important to the litigant;

(iii) interpretation of standard wording which appears in many statutes ...

(c) whether there was a marked difference of opinion in the decisions below and sufficient merit in the issue put forward;

(d) whether there is some prospect of the appeal succeeding on its merits; ... although there is no need for a justice before whom leave is argued to be convinced of the merits of the appeal, as long as there are substantial questions to be argued;

(e) whether there is any clear benefit to be derived from the appeal; and

(f) whether the issue on appeal has been considered by a number of appellate bodies.

[supporting citations omitted]

[25] The respondents stressed the issue of merit and further cited Re: Consumers Association of Canada (B.C. Branch), [1994] B.C.J. No 3152 (C.A.) (QL) at paragraph 4:

... The test requires the applicant to show that the appeal is meritorious, that there is an important question raised by the appeal, and that there are important practical consequences of significance to the parties of the appeal, and to persons other than the proposed parties to the appeal.

[26] Hydro and the GSXCCC also cited Solex Gas Processing Corp. v. Alberta (Energy and Utilities Board) (2004), 361 A.R. 232, 2004 ABCA 388. Mr. Justice O’Leary, at paragraph 25, said that on a leave application the judge must consider whether the proposed appeal is prima facie meritorious, thus bring into play the standard of review which, in turn, will use (paragraph 26) a pragmatic and functional approach. He said that where an error of law is with respect to a matter which does not involve the experience and expertise of the Board, and where a court is equally capable of deciding the issue, the decision will be reviewed on a standard of correctness. He added:

[26] ... However, where the alleged error of law is in respect of a matter within the Board’s delegated jurisdiction and involves application of the Board’s acknowledged experience and expertise ... the more deferential standard of reasonableness will be applied.

[27] The applicants did not take issue with any of the submissions of Hydro and the Duke Point Partnership as set forth above. However, they submitted that when the particular matters that they raise as breaches of natural justice are applied to the items suggested for consideration in Queens Plate, a case is made out for leave to be granted. They asserted that four factors in Queens Plate are brought into play, those being: 1) questions of general importance; including the jurisdiction of the Commission; 2) interpretation of “public interest” in s. 71 of the Act; 3) this is the applicant’s first avenue of appeal; and 4) there are substantial questions of law to be argued.

[28] The Joint Industry Electricity Steering Committee conceded during the hearing in this Court that if leave was granted it would not proceed with all of the issues raised here. This was in recognition that some of the grounds had little, if any, merit. No indication was given as to which of the grounds would be discarded. I must therefore consider all of the issues raised by the applicants.

CONSIDERATION OF THE REASONS PROPOSED BY THE GSXCCC AND THE JIESC FOR LEAVE TO APPEAL

1. The Commission erred in its interpretation and application of section 71 of the Act by placing inappropriate limitation on the scope of the hearing and reversing the onus regarding “public interest”.

[29] The applicants submit that the Commission limited the scope of the hearing to such an extent that it cannot be said that the “public interest” requirement of s. 71 of the Act was fulfilled. They say that using as a starting point that on-Island generation was the most cost effective way to meet the energy needs was an error in that it limited consideration of all available resource options. They say the definition of “public interest” is at stake and that it was not properly defined by the Commission. Their argument seems to further say that even limiting the definition to what the Commission must have considered it to be, it was not fulfilled.

[30] The applicants submit that the Commission looked only to a short-term solution to a long-term problem and that in doing so it failed to consider short-term bridging options and alternative long-term mainland generation. They point to the decision of the Commission made in a pre-hearing conference on 30 November 2004 wherein the Commission identified the “principle issue” for the hearing to be:

Is Tier 2, Tier 1 or the No Award option the most cost-effective option to meet the capacity deficiency on Vancouver Island commencing in the winter of 2007/08?

This terminology requires some explanation, for which I will use the helpful submission of the GSXCCC. Tier 1 refers to the winning bid, i.e. the Agreement with the Duke Point Partnership. Tier 2 is a combination of two specific projects that were bid in the tender process. Those projects being a wood/waste-fired generator in Gold River and a gas-fired “peaker plant” proposed for Ladysmith. The “No Award” option refers to a portfolio entitled the “Norske Canada Demand Management Project” that would use up to 210 MW of electric power from Norske’s Vancouver Island pulp mills plus a number of 23 MW mobile oil-fired generators to be used as temporary service if necessary.

[31] The applicants complain that the starting point in the hearing was for on-Island generation and that this was so narrow that no alternatives were open to be pursued. This starting point, as illustrated by the “principle issue” quoted above, arose, in the applicants’ submission, from the VIGP decision of 8 September 2003. I referred to this earlier, but will now reproduce a portion of the decision that appears at page 78:

In Chapter 4, the Commission Panel confirmed that there will be a future capacity shortfall on Vancouver Island. Although the Commission Panel has found that the need for new supply resources is approximately 100 MW less than BC Hydro’s forecast for 2007/08, there is a need to move expeditiously to reinforce electricity supply to Vancouver Island prior to the winter of 2007/08. The evidence in this hearing suggests that the appropriate next resource addition should be on-Island generation, provided the costs of the proponents’ projects can be confirmed near their expected values.

[32] Counsel for Hydro and the Duke Point Partnership, on this hearing, submit that the Commission was entitled to import the VIGP decision into the hearing in question. On this, counsel for the Duke Point Partnership said:

The JIESC submission ... suggests that the Commission was not entitled to rely on its finding in the VIGP Decision that the most cost-effective way to meet Vancouver Island’s 2007/08 capacity needs was additional on-Island generation. The notion that the Commission cannot rely on its own earlier decisions would render the Commission’s responsibilities under the UCA [Act] practically impossible to carry out. The Commission exercises a supervisory role over energy supply in this province, including the implementation of Government policy. Its role requires long-term planning for energy needs and this simply could not happen if the Commission was unable to plan for the future energy needs of the province by building upon past determinations. The instant case dealt precisely with the same energy requirements and capacity deficiency as were addressed previously in the VIGP decision. That decision provided the foundation to move forward with the process that resulted in the decision that is currently being appealed. The two decisions are inextricably linked.

I agree with that submission. The Commission was, in my opinion, entitled to take into consideration, and to rely upon if it so wished, the earlier finding that its pursuit should be as to the most cost effective “on-Island” generation.

[33] The pre-hearing conference of 29 and 30 November 2004 was held to define the scope of the issues to be addressed at the hearing. All parties were provided a full opportunity to make submissions. The scope of hearings held pursuant to the Act is not legislatively dictated, thus the terms are very much in the hands of the Commission, subject of course to public interest and procedural fairness. In other words, there is discretion in the Commission in coming to a decision as to scope. This is an important consideration for this Court on this application.

[34] The applicants submit that the term “public interest” must be interpreted in the legislative and social context in which it is used. The context, whether legislative or social, must consider, at least, all customers of Hydro. The GSXCCC had interests beyond that of the customers. The Commission considered those submissions and adjudicated upon them. It did not restrict itself to the interests of Hydro customers.

[35] The Joint Industry Electricity Steering Committee, both at the hearing and in this Court, put its emphasis upon the interests of the customers of Hydro. The Commission’s concern for the customers can be seen in the mental struggle that the chair went through in the in camera session. As quoted earlier, he was looking for an answer that would “add some value to customers.” After hearing all of the witnesses and the submissions of the parties, including the intervenors, the Commission determined that the competitive bidding process and the resultant agreement were “in the public interest.”

[36] Mr. Sanderson made a point with which I agree:

The applicants complain that the scope of the hearing as determined by the Commission was too narrow and say that section 71 of the UCA mandates a general test of “what is in the public interest.” What is or is not in the public interest is a determination to be made by the Commission in the exercise of its legislative authority. Others can disagree with the Commission in this regard, but such disagreement does not give rise to an error of law or jurisdiction.

[37] The applicants make one further point on the issue of public interest. They say that the Commission erred in reversing the onus for determining whether the agreement was in the public interest. For this submission they rely upon the statement of the Commission, quoted earlier, as follows:

As I noted earlier, the decision was 103 pages in length, explaining the entire process in commendable detail. The words quoted are at page 101 in the “Decision” segment of the reasons. To suggest that in expressing its final decision in the words used suggest that a “reverse onus” was used in the process cannot prevail if any attention is paid to the transcript of evidence and the reasons for the decision taken as a whole.

[38] In my opinion there is nothing in the submission of the applicants that would ground a successful appeal of the decision of the Commission on the basis of either unduly limiting the scope of the hearing or of its use of and interpretation of the issue of public interest. As such, this issue does not support the application for leave to appeal.

2. The Commission committed a breach of the rules of natural justice by receiving and relying on confidential information.

[39] The applicants contend that the Commission’s rulings on confidentiality were overly broad and did not take into account reasonable alternative means to protect confidentiality. In summary, they make these points:

(a) The absolute minimum information that intervenors required to assess the agreement was Appendix 3.

(b) Intervenors were not given the QEM [Quantitative Evaluation Methodology] spreadsheet in a timely manner.

(c) Intervenors never received the detailed assessment and information that was necessary to support the total in the Cost Effective Analysis (Appendix J.).

[40] I would first note with respect to (a) that it was supplied to the intervenors. Similarly, with reference to (b), the intervenors received the QEM spread sheet data on 14 January 2005. The intervenors now say that this did not give them adequate time to assess the information. However, no relief was sought from the Commission by the intervenors before or during the hearing that commenced on 17 January 2005.

[41] The submissions on (b) and (c) were not only of some significant length, but complicated by the technical language and some obscurity as to what was requested, what was required and why it was required. I will borrow again from the GSXCCC submission with respect to terminology. “Tier 1”, which I defined earlier, was unfortunately used as well in another context. I will refer to its use in that context as “tier 1”. The context was five portfolios that were evaluated by QEM at the end of the tender process. The GSXCCC explained this to the Court as follows:

It is also necessary to explain that of the five “Tier 1” [tier 1] portfolios evaluated by the QEM, three involved DPP (DPP using VIGP assets without duct firing, DPP using VIGP assets with duct-firing, and DPP using VIGP assets without duct-firing plus the 47 MW Tier 2 proposal); and two involved a Competitor (Competitor using VIGP assets without duct-firing, and Competitor using VIGP assets with duct-firing.) It can be seen, therefore that the QEM’s least-cost focus means that ‘DPP using VIGP assets without duct firing’ would automatically be the least cost of the three DPP portfolios and ‘Competitor using VIGP assets without duct firing’ would automatically be the least cost of the two Competitor portfolios.

[42] The submission of Mr. Wallace, on behalf of the Joint Industry Electricity Steering Committee with respect to (c), was as follows:

Seeing as the Commission’s determination of the scope of the proceeding was so closely tied to the Cost Effectiveness Analysis, it is inexplicable that the Commission did not order disclosure of this information. More importantly, the Commission cited and relied extensively on this information when evaluating the expected cost of each option without the validity of the information being tested in cross-examination by the Commission or the Intervenors contrary to the expectations established in the VIGP decision.

[43] Mr. Macintosh, on behalf of the Duke Point Partnership, made submissions in his written brief to this Court. In the oral hearing he made reference to legislative provisions as to confidentiality. In summary form he said as follows: The Commission has, by legislation, been granted broad discretion to determine which documents are to be kept confidential. The Commission acted in accordance with the legislation. The legislation referred to was the Act, Section 71(5):

An energy supply contract or other information filed with the commission under this section must be made available to the public unless the commission considers that disclosure is not in the public interest.

Also, the Administrative Tribunal Act, S.B.C. 2004, c. 45:

11(1) Subject to this Act and the tribunal’s enabling Act, the tribunal has the power to control its own processes and may make rules respecting practice and procedure to facilitate the just and timely resolution of the matters before it.

...

41(1) An oral hearing must be open to the public.

(2) Despite subsection (1), the tribunal may direct that all or part of the information be received to the exclusion of the public if the tribunal is of the opinion that

(a) the desirability of avoiding disclosure in the interest of any person or party affected or in the public interest outweighs the desirability of adhering to the principle that hearings be open to the public ...

(3) The tribunal must make a document submitted in a hearing accessible to the public unless the tribunal is of the opinion that subsection 2(a) or Section 42 applies.

(42) The tribunal may direct that all or part of the evidence of a witness or documentary evidence be received by it in confidence to the exclusion of a party or parties or any interveners, on terms the tribunal considers necessary, if the tribunal is of the opinion that the nature of the information or documents requires that direction to ensure the proper administration of justice.

[44] Mr. Macintosh went on to note that confidentiality issues were the subject of several applications and reconsideration applications. The Commission determined that the public interest was best served by preserving confidentiality in certain limited circumstances. No improper motive has been suggested. Furthermore, the Commission considered the leading case on this issue, Sierra Club of Canada v. Canada (Minister of Finance) 2002 SCC 41, 211 D.L.R. (4th) 193 and applied the strictest possible test in making its confidentiality orders.

[45] In response, Mr. Wallace said that the information sought “went to the core of the Commission’s final decision”. He said that while Section 71(5) of the Act authorized certain confidentiality, it does not justify non-disclosure of the information in question. Mr. Wallace also made concessions. He agreed that all the information regarding the agreement was “on the table” and he agreed that what he sought at the hearing, and received, was Appendix 3. However, he said that this is irrelevant to his position regarding Appendix J. Mr. Wallace, in the oral hearing on this application, also referred to the Sierra Club decision, outlining its findings and submitting that, in keeping with the judgment, the Commission should have sought a “reasonably alternative measure” to its confidentiality order.

[46] I am compelled to accept the position of the respondents. As a starting point I note the concession of Mr. Wallace as follows:

The Joint Industry Electricity Steering Committee recognized the Administrative Tribunals Act grants the Commission the authority to receive evidence in confidence if the Commission is of the opinion that the nature of the evidence requires that direction to ensure the proper administration of justice. ...

Mr. Wallace followed this by saying, “However, the Commission’s ruling on confidentiality were overly broad and did not take into account whether reasonable alternative means were available to protect confidentiality.”

[47] The legislative empowerment to govern its procedures and matters of confidentiality are difficult for the applicants to overcome in the circumstances of this case. No breach of the legislation has been revealed, rather simply a submission that the confidentiality orders were too broad considering the importance of the information to the ultimate issue. However, more than this must be established in order to have this matter form the basis for a successful appeal.

[48] This issue does not favour the granting of leave to appeal.

3. The conduct of the Commission created an apprehension of bias.

[49] In written submissions the applicants submitted that the manner in which the hearing was conducted establishes a reasonable apprehension of “attitudinal bias.” They point to what they say was extreme haste during the hearing, setting time limits for cross-examination and setting a date for delivery of its decision. The applicants also alleged that the Commission failed to ensure that necessary information from Hydro was made available to the intervenors. The Joint Industry Electricity Steering Committee referred in particular to the documents that I dealt with in the previous section of these reasons.

[50] The JIESC further submitted that the chair failed to recognize the significance of Commissioner Birch’s position prior to his voluntary recusal; that it went in camera when a less restrictive procedure would have sufficed; that it breached the stated purpose of the in camera hearing in exploring “whether it could adopt a slightly modified version of the agreement”; and that it improperly discussed in the absence of the intervenors what it should do to present the most cost-effective proposal.

[51] The GSXCCC submitted that the Committee’s comments during the in camera hearing (quoted in part earlier in these reasons) were predicated on the assumption that the only alternatives being considered were that of the Duke Point Partnership. This “is exactly what would cause a reasonable person to conclude that the Panel had rejected any other alternatives before having heard all the evidence.” Furthermore, the Committee’s argument that the in camera session was not directed to the overall principal issue “does not withstand scrutiny.” (This refers to the explanation that I summarized in the previous section regarding Tier 1 v. tier 1.) The GSXCCC concluded its written submission on this issue as follows:

In the end, the strongest evidence that the content of most of the in camera session was not properly characterized as confidential is the fact that, apart from DPP’s consent to the release of the answer to the first question [contained in the transcript at page 1741 quoted in part earlier in these reasons], the transcript of all but a portion of the rest of the session was eventually released.

[52] While it is open to the applicants to make that argument, the counter-argument has greater validity. The chair was reviewing the QEM model and the tier 1 portfolio. The results indicated that a non-winning bid had a higher net present value but would provide extra capacity at a very cheap cost. This was not the principal issue before the Commission. The quotation that I included earlier shows that the chair was concerned with this and wanted to be sure that the Commission secured the most cost-effective result. The Duke Point Partnership submission to this Court then picks up this narrative as follows:

By the end of the in camera hearing, it was recognized by the Commission Panel that a substantial portion of the contents of the hearing were in fact not of a confidential nature. The Chair also recognized that the discussion of what to do with the DPP plant with duct-firing was an issue regarding which the intervenors should have an opportunity to make submissions. Consistent with the views expressed by the Commission prior to the conduct of the in camera session, every effort was made to disclose as much information as possible. In fact, after DPP’s waiver of confidentiality, essentially all of the in camera transcript was disclosed.

[53] The parties to this hearing agree that the principles that are to be applied emerge in Committee for Justice and Liberty v. National Energy Board (1976), [1978] 1 S.C.R. 369, 68 D.L.R. (3d) 716. The test has recently been reviewed by this Court in R. v. Parmar, 2005 BCCA 187, and I find it convenient to quote as follows from that case:

[31] In Wewaykum Indian Band v. Canada, [2003] 2 S.C.R. 259, 2003 SCC 45, the Court, considering an issue as to whether Mr. Justice Binnie should be disqualified from sitting on the case, said:

[60] In Canadian law, one standard has now emerged as the criterion for disqualification. The criterion, as expressed by de Grandpre J. in Committee for Justice and Liberty v. National Energy Board, supra, at p. 394, is the reasonable apprehension of bias:

... the apprehension of bias must be a reasonable one, held by reasonable and right minded persons, applying themselves to the question and obtaining thereon the required information. In the words of the Court of Appeal, that test is “what would an informed person, viewing the matter realistically and practically – and having thought the matter through – conclude.” Would he think that it is more likely than not that [the decision maker] whether consciously or unconsciously, would not decide fairly.

[54] I agree with the respondents that a full consideration of the context in which the remarks were made does not demonstrate bias or anything that would lead a reasonable observer, reasonably informed, to conclude that the Committee “would not decide fairly.”

[55] As in Parmar, this issue of apprehension of bias can be viewed as well from the perspective or whether the Commission came to a pre-determined conclusion. On either footing it would not be open, in my opinion, for a panel of this Court to conclude that the decision of the Commission should be set aside.

[56] This issue does not support granting leave to appeal.

4. The Commission breached the rules of natural justice by directing Hydro to enter into a contract for gas transmission with TGVI [Terasen Gas (Vancouver Island) Inc.] for the Island Cogeneration Plant.

[57] In its decision the Commission stated that it was not persuaded that the short term gas transportation arrangements in the Agreement were adequate. It therefore said that acceptance of the Agreement would be subject to Hydro purchasing transportation from TGVI. The Joint Industry Electricity Steering Committee submits that this matter was not raised during the proceedings and that Hydro specifically stated that all matters related to the Island Cogeneration Plant were beyond the scope of the proceedings.

[58] The reasons of the Committee devote pages 56 to 60 inclusive to the subject of gas transportation. The Commission “determined” that gas availability risk was not within the scope of the proceeding but nevertheless said, “Hydro has the burden of establishing that gas transportation will be available.” The reasons note that Hydro “expects that it will enter into a firm transportation service agreement with TGVI by November 2005.” Further noted was that “Hydro argues that the Commission can compel TGVI to provide such service.”

[59] The reasons summarize the position as taken by TGVI and by the Joint Industry Electricity Steering Committee. Transcript page numbers are given for these references, but these pages are not available to this Court at this time. However, it seems clear that this issue was dealt with to some extent at the hearing and that the applicants were aware of the matter. Indeed, the reasons also note that “several other intervenors also argue that the lack of a gas transportation service agreement exposes BC Hydro ratepayers to risks in terms of both reliability of supply and costs.” [Commission Decision, p. 57]

[60] The response of Hydro on this application is as follows:

TGVI and BCH are engaged in discussions to reach an agreement for gas transportation service to both DPP and ICP. Pursuant to Commission Order E-1-105 BCH intends to advise the Commission on April 4, 2005 that progress towards an agreement has been made but more time is required for resolution of outstanding issues.

Any agreement that is reached between TGVI and BCH will be a ‘rate’ and have to be filed with the Commission pursuant to section 61 of the UCA. The Applicants and any other interested party will be free at that time to raise concerns they have with respect to whether the rate is just and reasonable.

Until an agreement is filed, JIESC’s suggestion that ratepayers may be prejudiced by its contents or that there would be any other practical consequence associated with whether this condition stands or not is entirely speculative. This Court should not hear an appeal with no demonstrated practical consequence.

[61] I fail to understand how this “subject to” provision could be said to undermine the legal correctness of the Committee’s decision, or impugn it procedures.

5. The Commission exceeded its jurisdiction with respect to the financial liability for taxes arising from greenhouse gas emissions.

[62] The Commission acknowledged, at pages 47 and 48 of its reasons, that future greenhouse gas regulations could be implemented in such a way that the burden would be placed upon Hydro. This could occur if the tax was imposed as a carbon tax. However, the Commission expressed the view that this is “less likely” than a greenhouse gas emission tax, borne by Duke Point Partnership. Nevertheless, the Commission said that the costs associated with the plant and borne by Hydro “are not prudent or justified, and should therefore be allocated to the shareholder rather than the ratepayer.” [Commission Decision, p. 48]

[63] The GSXCCC submit that it was beyond the jurisdiction of the Commission to express that opinion. Hydro responded to this submission by saying that any carbon tax liability is a question of fact that falls within the Commission’s jurisdiction and, as such, is immune from review by virtue of section 79 of the Act. That section reads as follows:

The determination of the commission on a question of fact in its jurisdiction, or whether a person is or is not a party interested within the meaning of this Act is binding and conclusive on all persons and all courts.

I am hesitant to render an opinion as to whether the expression of opinion by the Commission was a matter of fact. That is because there was no oral presentation on this and the bald statement of Hydro is not buttressed by any supporting argument. I do, however, accept the submission of Duke Point Partnership that no decision was rendered by the Commission as to how it would deal with the potential future occurrence and, as such, there is nothing to appeal.

[64] What was said by the Commission was that any gas emission tax “should be allocated to the shareholder” but this is not, in my opinion, a jurisdictional error, and even should it be, it would not be of a nature that would threaten the integrity of the Commission.

6. The Commission’s decision represents a long term solution to a short term problem and is improperly based upon the decision in the hearing of Hydro’s VIGP application.

[65] The Joint Industry Electricity Steering Committee submits under this heading that if the Commission was entitled to adopt any portion of the decision in the VIGP hearing, it was not entitled to define that decision as saying that “the next resource addition would be on-Island generation no matter what the cost.” The applicant says that the Agreement does not represent the most cost-effective option and that the cost of the Agreement is “vastly out of proportion to the short-term capacity deficit.”

[66] The Commission’s decision at page 3 specifically stated that it “accepted the following determinations from the VIGP Decision as relevant to a determination of the scope of this proceeding.” It then said that the first of these was that the evidence suggested that the appropriate next resource addition should be on-Island generation, “provided the cost of the proponents’ projects can be confirmed near their expected value.”

[67] The Commission came to conclusions based upon findings of fact that are not open for review by the courts. The finding by the previous Commission was not appealed and is not under appeal. The adoption of its finding of fact by the present Commission is sound in law and, in any event, is not under appeal. The cost factors, the need for a solution to the energy gap and the adoption of the Agreement are sought to be appealed on the basis of alleged procedural and jurisdictional breaches.

[68] It cannot, in my opinion, be fairly suggested that the Commission proceeded to its decision based upon a philosophy that on-Island generation was to be the answer “no matter what the cost.”

7. The Norske proposal was improperly rejected.

[69] The Commission, under the heading “Non-generation resource additions” at page 79 and following of its reasons, considered the Norske Canada Demand Proposal. The GSXCCC submitted that the Commission “had no evidence to support its conclusion that the proposal is not a viable option for addressing the Vancouver Island electricity capacity gap.”

[70] This is not so. The Commission had written submissions and oral testimony in that regard. Mr. John C. Kleefeld, a lawyer with counsel for Hydro, deposed in his affidavit that Mr. Yakout Mansour, vice-president of the British Columbia Transmission Corporation gave testimony on that issue. A transcript of his testimony was annexed and made available on this hearing. He testified that “you like to keep things at Norske for conditions where you really don’t have another alternative. You like to keep them for second[ary] contingency. You like to keep them for emergencies.” He added that such a proposal should be kept “for bridging and short-term purposes” but not for long-term purposes.

[71] I agree with the submissions of the applicants that this proposal is acceptable for operational purposes, but not for long term planning purposes. Arguing this factual finding provides no basis for the granting of leave to appeal.

8. There is a clear benefit to be derived from the appeal.

[72] This heading was introduced in order to fulfill one of the Queens Plate suggested considerations. The Joint Industry Electricity Steering Committee argues that a hearing of this case by a full panel of the Court “would bring clarity to the Commission’s confidentiality proceedings, the meaning of the words “public interest” and to the correct onus to be applied in the circumstances.”

[73] I do not see that as a foundation for granting leave to appeal if there is no reasonable prospect of success for the appellants in the appeal.

CONCLUSION

[74] I am unable to find merit in the many issues raised by the applicants. However, keeping in mind the directions contained in Queens Plate, I would be hesitant to deny leave, even given this finding, if I could find substantial questions to be argued. I cannot. There may well be strong arguments to be made by ratepayers and concerned citizens as to the most cost-effective answer to the envisioned energy shortage on Vancouver Island, but those have been made to the Commission. The matters upon which this Court has jurisdiction arise out of procedural and jurisdictional issues, and on those I cannot find “substantial questions to be argued.”

[75] Deference is also a major issue on this application. I will repeat what was said in this regard in Solex:

[26] ... where the alleged error of law is in respect of a matter within the Board’s delegated jurisdiction and involves application of the Board’s acknowledged experience and expertise ... the more deferential standard of reasonableness will be applied.

[76] Mr. Sanderson, for Hydro, submitted that the decision in Plateau Pipe Line Ltd. v. British Columbia (Utilities Commission) (2002), 166 B.C.A.C. 189, 2002 BCCA 149, affirmed (2002), 170 B.C.A.C. 6, 2002 BCCA 246, is applicable, particularly the passage in which I agreed with and adopted the following submission of counsel at paragraph 38:

The only way that the applicants stand to benefit from the appeal is if the Court can be persuaded to substitute its opinion as to what would constitute just and reasonable tolls for that of the BCUC [Utilities Commission]. Absent that, remission of the matter back to the BCUC would be a waste of resources for everyone involved. The BCUC has heard the arguments now put forward by the Applicants on two prior occasions and has not found them persuasive.

[77] While some of the words in that passage would have to be changed to meet the circumstances in the case at bar, the sentiment prevails.

[78] The application for leave to appeal is dismissed.

“The Honourable Mr. Justice Thackray”

Citation:	*Joint Industry Electricity Steering Committee and GSX Concerned Citizens Coalition et al v. B.C. Utilities Commission et al,*
	2005 BCCA 233